The ministry of coal has terminated the coal block development and production agreement on the Banai- Bhalumunda coal block with JSW Steel due to non-payment of performance security, the termination order available on the ministry’s website showed.
As a result, the Rs 100-crore bid security submitted by the Sajjan Jindal-led steelmaker stands forfeited as damages, the order issued by the nominated authority of the coal ministry said.
In the order, the nominated authority added that the company had failed to fulfil the conditions upon which the agreement was signed in March 2023. These conditions included the payment of Rs 1,000-crore performance security, in addition to the first instalment of the upfront payment and the fixed amount as mentioned in the agreement.
“It may be mentioned that submission of all aforementioned payments along with completion notice is pending till date,” the termination order said.
It added that JSW Steel sought multiple extensions to comply with the conditions citing “difficulties in securing the necessary performance security, upfront amount, and fixed amount.”
JSW Steel informed the exchanges of the termination of the agreement late Friday evening.
“Upon acquisition and detailed feasibility study, this mine was not found suitable from a techno-commercial perspective for JSW Steel Limited and hence the Company decided not to go ahead with the investment to develop the Coal Block,” it said in the exchange filing.
According to the details provided in the coal ministry order, JSW Steel has requested to surrender the coal block in May of 2023, after failing to comply with the payment conditions. In June 2023, it asked the ministry for an extension since it was in the process of undertaking a techno-commercial study on the site.
“On 06.12.2023, M/s JSW Steel Limited retracted its surrender request and sought approval to proceed with compliance, stating that CMPDIL (Central Mine Planning and Design Institute Limited) has completed the feasibility study, and the coal block was deemed viable with a proposed capacity of 12 MTPA,” the nominated authority wrote in the order.
However, there were no steps towards complying with the conditions set forth in the agreement and in August this year, the coal ministry sent a letter asking JSW Steel to specify the duration of the extension it sought. Failure to submit the requisite undertaking was deemed in breach of the agreement, the nominating authority said.
From: financialexpress
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